The Rate of Interest That Produces a Zero Net Present

question 92

Multiple Choice

The rate of interest that produces a zero net present value when a project's discounted cash operating advantage is netted against its discounted net investment is the

• A)cost of capital.
• B)discount rate.
• C)cutoff rate.
• D)internal rate of return.

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Definitions:

Cure the Defect

The process of correcting or fixing a flaw or error in a legal document or procedure.

Confirmed Letter of Credit

A letter of credit that has an additional guarantee by a second bank, ensuring payment under the letter of credit if the issuing bank fails to do so.

Seller's Bank

A bank appointed by a seller, often in trade transactions, to handle the documentation and receipt of payment from the buyer.

Liability

A company's or individual's legal responsibility for their actions or the state of being legally obligated to settle a debt.